For [Microsoft CEO Steve] Ballmer, the agreement provides some redemption in an area he has stressed is critical to Microsoft’s future. In an interview, he says the Yahoo deal received “more of my personal attention over the last 18 months than anything else we’re involved with,” including focusing on its most important new product in years, Windows 7. “It’s a big deal,” he says.

Of course, complex partnerships always require lots of time from senior management, but in this case, Ballmer’s quip speaks directly to the costs of antitrust scrutiny in terms of one of the most valuable resources available to any company: the time and attention of senior management. The “attentional cost” can of this deal for Microsoft could be broken into four parts beyond the normal costs of structuring any deal to make the most business sense:

How to structure the a Microsoft/Yahoo! deal so that it would be approved by regulators (defensive);

How to block a Google/Yahoo! deal (offensive);

Nursing the deal through the regulatory approval process over the coming months; and

The possibility that all of these costs could be wasted, to varying degrees, if antitrust regulators decide to block or restrict the deal.

These are all “deadweight losses” on the economy pure and simple—and ultimately costs to consumers.

I also speculated yesterday that uncertainty as to whether DOJ would block a Google/Yahoo! deal probably contributed to a delay of well over a year in concluding a Microsoft/Yahoo! deal—exacerbating the attentional costs to Microsoft. Yahoo! will also bear costs Nos. 1, 3 & 4 and Google bore its own costs in responding to Cost No. 2 and in trying to craft its own deal with Yahoo! last year, cost No. 1, which Yahoo! shared.

All three companies could have—and should have—been spending these critical attentional resources on the very things antitrust is, in theory, is supposed to promote: developing better products! If a company’s senior management spends all day on the phone with overpaid lawyers tinkering with deal structure and rearranging commas, all the engineering genius in the world won’t do much good.

As I noted yesterday, in rapidly evolving markets like search and advertising, distractions or delays of even a few months, can make a big difference to a company’s long-term ability to stay ahead of technological change:

the delay of over a year in reaching a [Yahoo!/Microsoft] deal is itself a significant cost of what economists would call the “regime uncertainty” created antitrust: Without clear rules, it’s difficult for economic actors to predict the decisions by regulators. A delay of a year could well prove to make a big difference in the ability of the two companies to mount a successful response to Google in search and advertising—just as Microsoft’s 18 month delay back in 2003-2004 in developing a search ad auction system to respond to Google’s AdWords system (which now produces 2/3 of its revenue) probably did much to thwart Microsoft’s initial efforts to compete in search.

As Adam as put it, Antitrust Law Can’t Keep Up with High-Tech! The sooner we learn this, and take antitrust off the table in high tech markets—both as a risk to corporate planning and as a potential weapon against competitors—the better all companies will be able to re-invent themselves as the paradigms of the web continually evolve.

Let’s hope that, as Holman W. Jenkins suggested last week in a WSJ op/ed, that Google and Microsoft in particular will find a way to work out a “cease-fire” in the rapidly accelerating arms race they’ve been in for the last decade—and agree to do battle on the field of pure competition.